Advantages of Money

Advantages of Money

Advantages of money include value storage, production at large scale, luxury goods or products, credit transaction, standard pricing or price mechanism, advance payment, and concept of investment & saving.

1.    Value Storage

Value storage is one of the important quality or advantage of the money. A large amount of value can be stored in a small space for future use. Value storage quality was lacking in the old systems.

2.    Production at Large Scale

Production at large scale is another important advantage of money or monetary system. In barter system only essential goods were used for immediate consumption.

3.    Luxury Products

There was no concept of luxury product in the barter system and only those product were produced, which were easy to market & sale (Essential Goods). The concept of luxury & innovative product were introduced by the money.

4.    Credit Transactions

Credit transaction or transaction on credit is facilitated by the monetary system. In barter system, it was difficult to operate credit transaction, because goods cannot store value, moreover, it is difficult to establish future price.

5.    Standard Pricing

Standard price or standard pricing concept came to existence due to money. This is one of the fundamental advantages of money, which has made possible the creation of market. In barter system, there was difficult to establish the standard price for a product.

6.    Advance Payment

Like credit transaction, advance payment is also only possible in the monetary system and there is no concept of advance payment in the barter system due to difficulty in storing the value.

7.    Investment & Savings

Concept of investment and saving was introduced by the monetary system. People can save money for the future investment; in barter system people could not store goods for future investment (producing more goods)